FedEx Corp. (NYSE: FDX) today reported the following
consolidated results for the quarter ended November 30 (adjusted
measures exclude the items listed below for the applicable fiscal
year):
Fiscal 2021
Fiscal 2020
As Reported (GAAP)
Adjusted (non-GAAP)
As Reported (GAAP)
Adjusted (non-GAAP)
Revenue
$20.6 billion
$20.6 billion
$17.3 billion
$17.3 billion
Operating income
$1.47 billion
$1.51 billion
$554 million
$684 million
Operating margin
7.1%
7.4%
3.2%
3.9%
Net income
$1.23 billion
$1.30 billion
$560 million
$660 million
Diluted EPS
$4.55
$4.83
$2.13
$2.51
This year’s and last year’s quarterly consolidated results have
been adjusted for:
Impact per diluted share
Fiscal 2021
Fiscal 2020
Mark-to-market TNT Express retirement plan
accounting adjustment
$0.15
—
TNT Express integration expenses
0.13
0.19
Aircraft impairment charges
—
0.19
“My sincere appreciation goes out to our nearly 600,000 team
members around the world who go above and beyond to keep the world
moving during this ongoing pandemic and unprecedented peak season.
Our strong revenue and earnings growth during the quarter is a
reflection of their continued hard work and commitment to our
customers,” said Frederick W. Smith, FedEx Corp. chairman and chief
executive officer. “These results demonstrate the unparalleled
strength of our global express network, the breadth of our
e-commerce capabilities, and the dedication of our people.”
Operating results increased due to volume growth in FedEx
International Priority and U.S. domestic residential package
services and pricing initiatives across all transportation
segments. These factors were partially offset by costs to support
strong demand and to expand services, variable compensation
expense, and COVID-19-related costs, including expenses incurred to
ensure the safety of FedEx team members and customers as well as
the costs of network contingencies, including additional personnel
to support operations through the pandemic.
Net income includes a pretax noncash loss of $52 million ($41
million, net of tax, or $0.15 per diluted share) associated with
amending a TNT Express European pension plan to harmonize
retirement benefits. Net income also includes a tax benefit of $191
million ($0.71 per diluted share) primarily related to favorable
guidance issued by the Internal Revenue Service during the quarter.
Last year’s results included a tax benefit of $133 million ($0.51
per diluted share) from the recognition of certain foreign tax loss
carryforwards.
Outlook
FedEx is not providing an earnings forecast for fiscal 2021. The
capital spending forecast for the year remains $5.1 billion.
“The benefits of the investments across our business over the
past several years are reflected in our strong second quarter
results,” said Michael C. Lenz, FedEx Corp. executive vice
president and chief financial officer. “While the overall
environment remains uncertain, we expect earnings growth in the
second half of fiscal 2021 driven by the anticipated heightened
demand for our services as we continue to execute on our strategic
priorities.”
Corporate Overview
FedEx Corp. (NYSE: FDX) provides customers and businesses
worldwide with a broad portfolio of transportation, e-commerce and
business services. With annual revenue of $75 billion, the company
offers integrated business solutions through operating companies
competing collectively, operating collaboratively and innovating
digitally under the respected FedEx brand. Consistently ranked
among the world's most admired and trusted employers, FedEx
inspires its nearly 600,000 team members to remain focused on
safety, the highest ethical and professional standards and the
needs of their customers and communities. To learn more about how
FedEx connects people and possibilities around the world, please
visit about.fedex.com.
Additional information and operating data are contained in the
company’s annual report, Form 10-K, Form 10-Qs, Form 8-Ks and
Statistical Books. These materials, as well as a webcast of the
earnings release conference call to be held at 5:30 p.m. EST on
December 17, are available on the company’s website at
investors.fedex.com. A replay of the conference call webcast will
be posted on our website following the call.
The Investor Relations page of our website, investors.fedex.com,
contains a significant amount of information about FedEx, including
our Securities and Exchange Commission (SEC) filings and financial
and other information for investors. The information that we post
on our Investor Relations website could be deemed to be material
information. We encourage investors, the media and others
interested in the company to visit this website from time to time,
as information is updated and new information is posted.
Certain statements in this press release may be considered
forward-looking statements, such as statements relating to
management’s views with respect to future events and financial
performance and underlying assumptions. Forward-looking statements
include those preceded by, followed by or that include the words
“will,” “may,” “could,” “would,” “should,” “believes,” “expects,”
“anticipates,” “plans,” “estimates,” “targets,” “projects,”
“intends” or similar expressions. Such forward-looking statements
are subject to risks, uncertainties and other factors which could
cause actual results to differ materially from historical
experience or from future results expressed or implied by such
forward-looking statements. Potential risks and uncertainties
include, but are not limited to, the negative impacts of the
COVID-19 pandemic; economic conditions in the global markets in
which we operate; anti-trade measures and additional changes in
international trade policies and relations; a significant data
breach or other disruption to our technology infrastructure; our
ability to successfully integrate the businesses and operations of
FedEx Express and TNT Express in the expected time frame and at the
expected cost and to achieve the expected benefits from the
combined businesses; our ability to continue to transform and
optimize the FedEx Express international business, particularly in
Europe; our ability to successfully implement our business
strategy, effectively respond to changes in market dynamics and
achieve the anticipated benefits and associated cost savings of
such strategies and actions; damage to our reputation or loss of
brand equity; the impact of the United Kingdom’s withdrawal from
the European Union and the terms of their future trading
relationship beyond December 31, 2020; the timeline for recovery of
passenger airline air cargo capacity; changes in fuel prices or
currency exchange rates; our ability to match capacity to shifting
volume levels; the impact of intense competition; evolving or new
U.S. domestic or international government regulation or regulatory
actions; future guidance, regulations, interpretations, challenges
or judicial decisions related to our tax positions; our ability to
successfully complete the acquisition of ShopRunner, Inc.; our
ability to effectively operate, integrate, leverage and grow
acquired businesses; legal challenges or changes related to service
providers engaged by FedEx Ground and the drivers providing
services on their behalf; an increase in self-insurance accruals
and expenses; disruptions or modifications in service by, or
changes in the business or financial soundness of, the U.S. Postal
Service; the impact of any international conflicts or terrorist
activities; our ability to quickly and effectively restore
operations following adverse weather or a localized disaster or
disturbance in a key geography; and other factors which can be
found in FedEx Corp.’s and its subsidiaries’ press releases and
FedEx Corp.’s filings with the SEC. Any forward-looking statement
speaks only as of the date on which it is made. We do not undertake
or assume any obligation to update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise.
The financial section of this release is provided on the
company's website at investors.fedex.com.
RECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURES TO GAAP FINANCIAL MEASURES
Second Quarter Fiscal 2021 and Fiscal
2020 Results
The company reports its financial results in accordance with
accounting principles generally accepted in the United States
(“GAAP” or “reported”). We have supplemented the reporting of our
financial information determined in accordance with GAAP with
certain non-GAAP (or “adjusted”) financial measures, including our
adjusted second quarter fiscal 2021 and 2020 consolidated operating
income and margin, net income and diluted earnings per share, and
adjusted second quarter fiscal 2021 and 2020 FedEx Express segment
operating income and margin. These financial measures have been
adjusted to exclude the impact of the following items (as
applicable):
- The second quarter fiscal 2021 mark-to-market (MTM) TNT Express
retirement plan accounting adjustment;
- TNT Express integration expenses incurred in fiscal 2021 and
2020; and
- Fiscal 2020 aircraft impairment charges.
The MTM TNT Express retirement plan accounting adjustment and
aircraft impairment charges are excluded from our second quarter
fiscal 2021 and 2020 consolidated non-GAAP financial measures and
FedEx Express segment non-GAAP financial measures, as applicable,
because they are unrelated to our core operating performance and/or
to assist investors with assessing trends in our underlying
businesses.
We have incurred and expect to incur significant expenses
through fiscal 2022 in connection with our integration of TNT
Express. We have adjusted our second quarter fiscal 2021 and 2020
consolidated and FedEx Express segment financial measures to
exclude TNT Express integration expenses because we generally would
not incur such expenses as part of our continuing operations. The
integration expenses are predominantly incremental costs directly
associated with the integration of TNT Express, including
professional and legal fees, salaries and employee benefits, travel
and advertising expenses. Internal salaries and employee benefits
are included only to the extent the individuals are assigned
full-time to integration activities.
We believe these adjusted financial measures facilitate analysis
and comparisons of our ongoing business operations because they
exclude items that may not be indicative of, or are unrelated to,
the company’s and our business segments’ core operating
performance, and may assist investors with comparisons to prior
periods and assessing trends in our underlying businesses. These
adjustments are consistent with how management views our
businesses. Management uses these non-GAAP financial measures in
making financial, operating and planning decisions and evaluating
the company’s and each business segment’s ongoing performance.
Our non-GAAP financial measures are intended to supplement and
should be read together with, and are not an alternative or
substitute for, and should not be considered superior to, our
reported financial results. Accordingly, users of our financial
statements should not place undue reliance on these non-GAAP
financial measures. Because non-GAAP financial measures are not
standardized, it may not be possible to compare these financial
measures with other companies’ non-GAAP financial measures having
the same or similar names. As required by Securities and Exchange
Commission rules, the tables below present a reconciliation of our
presented non-GAAP financial measures to the most directly
comparable GAAP measures.
Second Quarter Fiscal
2021
FedEx Corporation
Operating
Income
Net
Diluted Earnings
Dollars in millions, except EPS
Income
Margin1
Taxes2
Income3
Per Share
GAAP measure
$1,465
7.1%
$180
$1,226
$4.55
Mark-to-market TNT Express retirement plan
accounting adjustment4
—
—
11
41
0.15
TNT Express integration expenses5
48
0.2%
12
36
0.13
Non-GAAP measure
$1,513
7.4%
$203
$1,303
$4.83
FedEx Express Segment
Operating
Dollars in millions
Income
Margin
GAAP measure
$900
8.7%
TNT Express integration expenses
43
0.4%
Non-GAAP measure
$943
9.1%
Second Quarter Fiscal
2020
FedEx Corporation
Operating
Income
Net
Diluted Earnings
Dollars in millions, except EPS
Income
Margin1
Taxes2
Income3
Per Share
GAAP measure
$554
3.2%
$12
$560
$2.13
TNT Express integration expenses5
64
0.4%
14
50
0.19
Aircraft impairment charges
66
0.4%
16
50
0.19
Non-GAAP measure
$684
3.9%
$42
$660
$2.51
FedEx Express Segment
Operating
Dollars in millions
Income
Margin1
GAAP measure
$236
2.6%
TNT Express integration expenses
49
0.5%
Aircraft impairment charges
66
0.7%
Non-GAAP measure
$351
3.9%
Notes:
1 –
Does not sum to total due to rounding.
2 –
Income taxes are based on the company’s
approximate statutory tax rates applicable to each transaction.
3 –
Effect of “total other (expense) income”
on net income amount not shown.
4 –
The MTM TNT Express retirement plan
accounting adjustment reflects a noncash loss associated with
amending a TNT Express European pension plan to harmonize
retirement benefits.
5 –
These expenses were recognized at FedEx
Corporate and FedEx Express.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201217006101/en/
Media Contact: Jenny Robertson 901-434-4829 Investor Contact:
Mickey Foster 901-818-7468 Home Page: fedex.com
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